Provisional Tax, SARS, and More: February Updates

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Tax Reminders

This is a gentle-ish reminder that provisional taxpayers must remember to file and pay their 2nd provisional tax returns before the end of February 2023.

For all our retainer clients, we will contact you with your calculation, but if you don’t hear from us before the 15th of February, kindly get in contact with us. We are only human 😊.

Also remember to send us your bank statements and documents as soon as possible, as we might not be able to do all the bookkeeping in time if we receive this late.

For individual taxpayers, please remember to send us your estimated income and expenses as soon as possible, so that we can calculate and submit your return.

How will you know if you are a provisional taxpayer?

If you earn any other income apart from your salary i.e., consulting fee income, high interest income, capital gains or rental income etc. you should submit a provisional tax return. All entities/companies are registered for provisional tax and provisional tax should be submitted.

The 2nd provisional tax is based on the same accounting period as the August 2022 provisional tax calculation. So, if you had to pay provisional tax in August 2022, you will know if you are a provisional taxpayer.

It will also appear on your last tax assessment indicating if you a registered provisional taxpayer.

What happens if I do not submit a provisional tax return?

When you submit your 2022 income tax return, and SARS assesses you with other income, but no provisional tax returns have been submitted, SARS will levy you with penalties and interest including non-submission penalties.

Since we need to calculate your provisional tax before we can submit it, we would really appreciate it if you could send it to us as early as possible. This will ensure:

  • Accurate calculation

  • No unnecessary penalties and interest

  • Enough time to finalize and submit your return and hopefully add some value.

We will need the following:

1 ) An estimate of your total yearly earnings including:

  • Salary Income (Send us your payslip)

  • Interest Income (We can base this on 2016 if you have not made any additional Investments or do not know of any changes)

  • Rental profit (Income less Expenses schedule)

  • Business profit if you trade as a sole proprietor or do consulting work in your personal name (Income less Expenses schedule)

  • Pension Income

  • Annuity Income

  • Retirement exit income (when you exit out of your retirement fund)

  • Any other income

2) Medical aid contributions and how many dependents you have on your medical aid. Please remember that this is only if you personally pay the medical aid.

3) Retirement annuity contributions for the year paid.

4) Any other allowable deductions that you have not considered above

For more information on provisional tax refer to SARS website.

If you have any questions, please do not hesitate to contact us via email or phone us on 011 658 1324.

Trusts Tax Affairs

If you own a trust and haven’t prepared a tax return for the trust, we would like to encourage you to get your trust’s tax affairs in order. SARS has prepared auto-assessments on trusts, including capital gains and interest that have been distributed to beneficiaries.

At the moment this is the ‘hot area’ for SARS as people don’t think about their trusts tax affairs as actively as they would think about their own, and find themselves not preparing tax returns for years. Get in touch if you think you need some help.

SARS and Industry

Did you know Esmerelda and Annja are registered tax practitioners? This means that we have to be registered with a professional body and comply with Continuous Professional Development hours to be registered. You can search for a tax practitioner’s status on the following website.

The traditional IT14SD, which was a corporation tax audit, has been stopped and the procedure is now that if your return has been selected for audit, you will be notified to submit certain documents online.

These documents must be submitted within 21 days. It is very important to react to any notification received from SARS, and if you are unsure about the email or text, please let us know and we will gladly follow up for you.

A person or entity that has a business or ‘carried on a trade’ can register for VAT. The compulsory VAT registration is R1 million sales/turnover for the last 12 months or if the sales/turnover will contractually exceed the R1 million mark in the next 12 months.

You can also register voluntarily if the turnover or sales go over R50 000 for the last 12 months. You have to register within 21 days and you also have to notify SARS of any changes to your

  • Banking details

  • Business address

  • Tax Representative

  • Trading name changes

  • Stop trading.

We would like to encourage businesses that are registered for VAT to ask the question ‘are the details SARS hold for me correct?’ and if you are unsure, please ask us to assist you.

Travel logs and SARS

Since 2011, any person who receives a travel allowance is required to present a logbook to the South African Revenue Service (SARS) before any travel tax claim can be processed.

Without a logbook you won’t be able to claim the cost of business travel against your travel allowance. SARS doesn’t make any exceptions.

We have prepared an excel spreadsheet that you can use to prepare your logbook, or you can use the SARS pdf.

It is important to note that the following information should be recorded on your travel log:

  • Record your motor vehicle’s odometer reading on 1 March 2022

  • Make sure that you keep a logbook throughout the year.  Note that it is not necessary to record details of private travel, but you must record details of business travel.

  • Record your motor vehicle’s closing odometer reading on the last day of February (28/29) of the next year.

  • Calculate your total kilometres for the full year (closing kilometres less opening kilometres).

  • Calculate your total business kilometres for the year (sum of all business kilometres).

NB: Remember to record your motor vehicle’s closing odometer reading on the last day of February 2023 to use in next year’s travel log.

You can then calculate your total claim either by using SARS rates or you can keep record of your actual expenses i.e. Petrol/Fuel, oil, repairs and maintenance, licenses, insurance, wear and tear and finance charges on the vehicle.

It is worth keeping record of the actual expenses if you own/drive an expensive vehicle.

SARS does not require you to keep a daily odometer reading, just the annual total.

NB: The distance travelled between home and work is considered private.

TIP: Pumeza says “this is the area in personal tax submissions where we see the most SARS audits being done”.

Business Valuation

Do you know what your business is worth? There are so many subjective approaches that can be used to value a business, and it depends on if you are the buyer or the seller. And what type of business you are in.

We use a program called Syft Analytics, and we can provide a quick valuation report that uses the information on Xero to give you a brief understanding of what the value of your business is.

Again it is not a formal valuation, but we think it might be useful for business owners to understand what their efforts have achieved. So, if you are interested, please get in touch.